Ministry of Economic Development drafts Arctic zone development project

The Russian Ministry of Economic Development has prepared a draft law on the development of the Russian Arctic zone, which provides for mutual irrevocable liabilities between the state and investors in the core development zones of the Northern regions in particular. The draft law is available on the regulative law website. It is planned to submit it for the Government's examination by December 18.

The memo to the new draft law reads that its purpose is "to create conditions for complex socio-economic development of the Russian Arctic zone through establishing core development zones for exploring mineral and raw material resource centers in the Arctic, attracting investments plus developing the Northern Sea Route and making them functional."

It is noted that the first draft envisaged for the state regulation of a wide range of development issues in the Arctic zone, as well as for the establishment of the core development zones. However, during the agreement process, the Ministry had to drop the initial format of the "Arctic Code." At the end of January 2017, the Government returned the draft law for finalization with a note made by Deputy Prime Minister Dmitry Rogozin: "This law is needed, but it must be exact and dedicated to the core development zones."

The document regulates the relations, which arise when the core development zones are being established, functioning or ceasing to function; and conditions of possible appliance of special preference modes or other measures of the state support to provide for the complex development in the Arctic zone.

Unlike priority development and special economic zones, the core development zones are needed to support not just separate areas as platforms for speeded socio-economic development, but as a complex of interconnected project, where the state support would be effective as well as viable.

The draft law stipulates that a core development zone is created for indefinite time. However, there are several conditions, under which a core zone may stop functioning after a proposal from the responsible federal agency.

One of the key specifics of the draft law is the irrevocable liabilities: the state has to create the infrastructure, provide all the necessary benefits and preferences plus special modes of business activities, and investors must, in their turn, invest into the projects and implement them.

The draft law interconnects the creation of the infrastructure with the implementation of several anchor projects. Those are defined as investment projects, which cost no less than 100 billion rubles and serve as development drivers for the macro region; without which the development of other, less costly projects is impossible.

The draft law also provides for establishing a support fund in the Arctic to finance the investment projects in the core development zones.

It also provides for creating a management company for coordination and analytical support of the core development zones.